News Corp.'s publishing arm to focus on losses at Times and Sunday Times, estimated at £1M/week; insiders say steps to reduce losses must proceed delicately due to conditions that require separate identities of Times, Sunday Times
December 7, 2012
– Slashing losses at the Times and Sunday Times, running at an estimated £1m a week, is to be a priority for News Corporation's soon-to-be separated publishing division – although any efforts to tighten integration between the two titles is likely to require a loosening of the undertakings given by Rupert Murdoch when he bought the newspapers.
The operating deficits – which stem largely or possibly exclusively from the daily title – have long been tolerated by Murdoch as part of the overall News Corporation group, which has the financial muscle to absorb the losses.
But the because the publishing company is smaller, excluding News Corp's more profitable film and TV businesses, it will mean that the individual newspapers will be in greater focus with investors.
Insiders say that it will be necessary to reduce the losses, but the efforts to do so have to proceed delicately because of the 1981 undertakings signed by Murdoch as a condition for winning ministerial approval for the purchase of Times Newspapers bind him "to preserve the separate identities of the Times and the Sunday Times".
However, News International's high-profile problems – the phone-hacking scandal and arrests of Sun journalists over alleged corrupt payments to public officials – mean that the company is sceptical as to whether it would be able to win political approval to see the undertakings watered down to allow widespread seven-day working.
But it may be possible to argue that the economic circumstances for newspapers have changed. Two smaller competitors are also loss-making.
Guardian News & Media, which lost £44.2m last year, is trying to cut 68 editorial jobs – having already accepted just over 30 voluntary redundancies, and has told staff that compulsory redundancies cannot be ruled out. The Independent lost £18m in its last full financial yearand its owner Alexander Lebedev has said he is looking for a minority investor.
Policing the Murdoch undertakings is a responsibilty for the six "independent national directors" of Times Newspapers Holdings, whose ranks include Sir Robin Mountfield, a former permanent secretary, Sir Rupert Pennant-Rea, a former editor of the Economist, and Veronica Wadley, the ex-London Evening Standard editor. Any proposals that touched on the undertakings would have to be a matter for them.
The independent directors are also in place to ensure that "each of the two editors would be free to make his own decision on matters of opinion and news and each would be free to disagree with the other and with any other newspaper in which Mr Murdoch may have an interest". A majority of the six have to agree to the appointment or dismissal of an editor of either newspaper.
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